dollar

Draft bill to ban China’s digital yuan from US app stores

Three ​​Republican senators introduced a bill to protect Americans from the “Authoritarian Digital Currencies Act.”

Lawmakers in the United States are moving to protect the country from the potential undesirable impacts of the global adoption of China’s national digital currency.

Three ​​Republican senators, Tom Cotton, Mike Braun and Marco Rubio, introduced a bill on Wednesday, aiming to limit the use of China’s central bank digital currency (CBDC) in the United States.

The bill is referred to as “Defending Americans from Authoritarian Digital Currencies Act” and proposes to prohibit the use of China’s digital currency payment system, e-CNY, for U.S. app stores and other purposes.

The term “app store” covers all publicly accessible websites, software apps or other electronic services distributing apps from third-party developers to users of computers, mobile devices or any other “general-purpose computing device,” the senators noted.

According to the bill, app and software distributors in the U.S. shall not support or enable transactions in e-CNY or support any app that features such transactions in the country.

The senators reasoned that banning China’s digital yuan in the U.S. would help the nation avoid “direct control” and surveillance of users’ financial activity.

Cotton, a known proponent of the U.S. digital dollar project, specifically argued that a CBDC could be used to spy on the financial activity of people, stating:

“The Chinese Communist Party will use its digital currency to control and spy on anyone who uses it. We can’t give China that chance — the United States should reject China’s attempt to undermine our economy at its most basic level.”

“We cannot allow this authoritarian regime to use their state-controlled digital currency as an instrument to infiltrate our economy and the private information of American citizens,” senator Braun said. “This is a major financial and surveillance risk that the United States cannot afford to make,” Rubio stated.

Related: Brainard tells House committee about potential role of CBDC, future of stablecoins

China is one of the world’s first countries to pilot its own digital currency, launching its first digital yuan trials in April 2019. Following multiple internal tests, the Chinese government has been actively promoting cross-border implementations of the digital yuan, working with central banks of Hong Kong, Singapore and others.

Historically, U.S. authorities have viewed the Chinese CBDC as a national security threat. In March, another bill also proposed to limit the use of China’s digital yuan as it may be used to circumvent sanctions and compromise users’ personal information.

Spooky Solana breakdown begins with SOL price facing a potential 45% drop — Here’s why

SOL price can preserve the bullish bias, however, as its two multi-month support levels converge for the first time.

Solana (SOL) dropped on May 26, continuing its decline from the previous day amid a broader retreat across the crypto market.

SOL price pennant breakdown underway

SOL price fell by over 13% to around $41.60, its lowest level in almost two weeks. Notably, the SOL/USD pair also broke out of what appears to be like a “bear pennant,” a classic technical pattern whose occurrences typically precede additional downside moves in a market.

In detail, bear pennants appear when the price trades inside a range defined by a falling trendline resistance and rising trendline support.

Bear pennant pattern. Source: ThinkMarkets

These patterns resolve after the price breaks below the lower trendline, accompanied by higher volumes. As a rule of technical analysis, traders decide the pennant’s profit target after adding the length of the prior’s leg lower (called “flagpole”) to the breakdown point.

SOL has been undergoing a similar breakdown after closing below its pennant’s lower trendline on May 25, as shown below. In theory, Solana’s profit target comes to be near $23, down about 45% from May 26’s price.

SOL/USD daily price chart featuring ‘bear pennant’ setup. Source: TradingView

Nonetheless, SOL’s bear pennant breakdown appears without a spike in trading volumes, suggesting that traders are not fully convinced with the move. That could prompt the token to retest the pennant’s lower trendline as resistance.

Moreover, a successful retaking of the trendline as support risks invalidating the bear pennant setup while bringing the 20-day exponential moving average (20-day EMA; the green wave) near $57.59 in proximity as the next upside target.

Conversely, a pullback could keep SOL’s near-$23 profit target in view, with $35.50—the May 12 price floor that preceded a sharp rebound—serving as interim support. 

Solana price support confluence

SOL also trades near a support confluence, comprising multi-month horizontal and rising trendlines.

SOL/USD weekly price chart. Source: TradingView

The horizontal trendline near $45.75 served as resistance during the April–August 2021 session and later flipped to become support between January 2022 and March 2022. Simultaneously, the rising trendline has been capping SOL’s extended bearish attempts since March 2021.

Related: Assuming Bitcoin plays nice, higher timeframe analysis points to $90 Solana (SOL) price

As the two trendlines converge, they could become a psychological entry point for investors with a long-term upside outlook. That would mean SOL rebounding towards its next upside target near $79, which also coincides with a multi-month falling trendline resistance.

On the other hand, a continued selloff in the Solana market would have SOL risk another massive decline, as discussed in the bear pennant setup above.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

U.S. dollar index retreats from 20 year highs — But will DXY topping spark a Bitcoin recovery?

Strong euro and overbought readings could pressure the dollar further, showing signs of topping out — Bitcoin at risk of falling.

The United States dollar index (DXY) retreated broadly from its prevailing bull run in the past two weeks, dropping by up to 3.20% after hitting its two-decade high of 105.

Overvaluation risks grip dollar market

The U.S. dollar’s correction in the last two weeks preceded twelve months of relentless buying.

To recap, the greenback’s weight against the basket of top foreign currencies grew by around 14.3% in a year, primarily as markets looked for safe havens against the fears of a hawkish Federal Reserve and, more recently, the military conflict between Ukraine and Russia.

DXY weekly price chart. Source: TradingView

Cash balances among the global fund managers grew 6.1% on average since 9/11, a recent survey of 288 asset allocators by Bank of America showed. The report also noted that 66% of asset managers believe global profits will weaken in 2022, prompting them to hold “overweight” cash positions.

“The market has hoarded a huge amount of dollars in recent months,” George Saravelos, strategist at Deutsche Bank, told the Financial Times, adding that it is “leading to a very substantial dollar overvaluation.”

Thus, the U.S. dollar’s latest retreat may have been an interim correction to neutralize its “overbought” conditions, as the greenback’s weekly relative strength index (RSI) readings also suggested, shown in the chart below.

From a further technical perspective, the DXY could decline further toward a rising trendline that, as support, has been capping its downside moves since January 2021, as shown below. 

DXY weekly price chart. Source: TradingView

If more selloffs occur, the index is likely to pull back from its current resistance range, with the next downside target at the 0.786 Fib line near 100.

Stronger euro prospects

The DXY also pulled back earlier this week as Christine Lagarde, president of the European Central Bank (ECB), set a new and more hawkish policy on May 23.

Lagarde committed to interest rate hikes by September 2022, thus turning away from ECB’s decade-long dovish monetary policy that has resulted in de facto negative interest rates.

As a result, rates in the eurozone would shoot back to zero, the prospect of which has made the euro stronger against the U.S. dollar.

EUR/USD weekly price chart. Source: TradingView

But, even with the ongoing Ukraine-Russia crisis and its access to energy thrown into haywire, the eurozone’s confidence in business growth remains strong, the recent IFO survey shows. That would mean more upside boost for the euro, which could pressure the dollar lower.

The IFO survey shows robust German business confidence. Source: Bloomberg

“It’s still too soon to say with any confidence that the dollar is now into a weakening trend,” said John Authers, senior editor at Bloomberg Opinion, adding:

“But its decline is another indication that the ‘stagflation and ever-higher rates’ narrative is being rethought.”

EM currencies versus Bitcoin

A weaker DXY merely represents its declining weight against foreign currencies. But, a deeper look into the dollar shows weakening purchasing power in a high inflation environment. The consumer price index (CPI) was above 8% as of this April 2022

As a result, the U.S. dollar, albeit stronger than it was a year ago, has not been able to send emerging market currencies into a tailspin, thus breaking off their widely-watched negative correlation.

Notably, returns on the currencies of developing nations such as the Brazilian real and Chilean peso have been higher than the dollar since January 2022.

BRL/USD and CLP/USD daily price chart. Source: TradingView

Emerging market (EM) currencies tend to underperform when the dollar rises, mainly because investors look at the greenback as their ultimate haven in times of global market uncertainty. But, with commodity prices rising due to the Ukraine-Russia crisis, investors are rethinking their strategy.

Meanwhile, countries increasing their interest rates are also creating a better investment environment for their currencies, says Stephen Gallo, European head of FX strategy for BMO Capital Markets.

Excerpts from his statement to the Wall Street Journal states:

“Emerging-market central banks are forced to tighten policy to keep pace with the Fed. It’s either that, or capital controls are imposed.”

The ongoing power play between the dollar and the EM currencies has left Bitcoin (BTC) without consideration. Its value has dropped by over 50% since November 2021 and remains heavily with risk-on assets.

Related: Scott Minerd says Bitcoin price will drop to $8K, but technical analysis says otherwise

BTC/USD daily price chart featuring its correlation with DXY and EUR/USD. Source: TradingView

However, Bitcoin’s long-standing negative correlation with the DXY has flipped to positive this week. This suggests that a further decline in the dollar markets might not necessarily trigger a BTC price recovery in the near term. 

As Cointelegraph recently reported, calls for a $20,000 macro bottom and even much lower are growing louder as Bitcoin struggles to rise back above the $30,000 mark. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Do you have the right to redeem your stablecoin?

Spoiler: No, stablecoin issuers do not guarantee the legal right for users to claim fiat currency back.

Stablecoins are often discussed with regard to their “stability.” It is usually questioned whether a stablecoin is sufficiently backed with money or other assets. Undoubtedly, it is a very important aspect of stablecoin value. But, does it make sense if the legal terms of a stablecoin do not give you, the stablecoin holder, the legal right to redeem that digital record on blockchain for fiat currency?

This article aims to look into the legal terms of the two largest stablecoins — Tether (USDT) by Tether and USD Coin (USDC) by Centre Consortium, established by Coinbase and Circle — to answer the question: Do they owe you anything?

Related: Stablecoins will have to reflect and evolve to live up to their name

Tether

Article 3 of Tether’s Terms of Service explicitly states:

“Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all.”

Let us unpack this. First, Tether may delay any claim in case of lack of liquidity, unavailability or loss of reserves. We reasonably should ask how this can even happen if they claim (in the same article) that “Tether Tokens are 100% backed by Tether’s Reserves.” The answer is found down below in the terms. USDT is “valued” 1:1 but not exclusively backed with fiat currency. And as per the terms, “the composition of the Reserves used to back Tether Tokens is within the sole control and at the sole and absolute discretion of Tether.”

As the United States Federal Reserve Board concluded in their recent report:

“They are backed by assets that may lose value or become illiquid during stress, leading to redemption risks, and lack of transparency may exacerbate those risks.”

More interesting appears the part of Tether’s terms where they reserve the right to return in-kind. It means you buy USDT for the U.S. dollars, but they can return you a bond, a stock or “other assets held in the Reserves.” And, who knows if these assets will be worth anything?

It should be noted that redemption from Tether is possible if you are “a verified customer of Tether.” Normally, crypto exchanges and other financial institutions are direct customers of Tether. End-users exchange stablecoins with their applications, not with Tether, and hence must check with legal terms that such providers cast. Nevertheless, according to Tether’s FAQ, individuals can also open an account with Tether after accomplishing a Know Your Customer (KYC) check.

Related: The United States turns its attention to stablecoin regulation

Circle USDC

Circle has much in common with its twice-as-big rival, though surprisingly, its terms are even more discouraging. They, similarly, do not promise to hold equivalent fiat reserves and back their stablecoin with “an equivalent amount of U.S. Dollar-denominated assets,” quoted from Article 1.

Promising Article 2 of their terms states that “Circle commits to redeem 1 USDC for 1 USD.” The bad news is that this rule applies only to Circle partners (crypto exchanges, financial institutions, etc.), which they call users Type A. End-users become customers of these partners (say, when you open an account with a crypto exchange), and there is no way for an individual to become Circles’ direct user and exercise the right to redemption.

In Article 13, they clarify that Circle does not guarantee that the value of 1 USDC will always equal 1 USD because “Circle cannot control how third parties quote or value USDC.” This means Circle does not mandate their partners to cast any specific terms to their end-users, which gives such stablecoin providers freedom in what they legally promise to their customers. Circle states they are not “responsible for any losses or other issues that may result from fluctuations in the value of USDC.”

Simply not equal

Both Tether’s USDT and Circle’s USDC are not legally equal to fiat money. Moreso, their reserves, which they claim to ensure 1:1 value, are not fully pegged to fiat. They back their digital tokens with various assets, such as securities, which can eventually decrease in value and create trouble with stablecoin liquidity.

The main question was whether an individual holding the stablecoin could convert it to fiat. The short answer is that there is no such right that the customer can exercise through legal means, such as claiming it in court. In the case of Tether, they let an individual become their direct customer to redeem USDT. But, they leave the right to return not fiat but any asset in their reserves. In the case of Circle, they legally promise redemption but do not admit individuals to exercise this right, which leaves the customer one to one with multiple exchanges, which do not necessarily guarantee this right.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Oleksii Konashevych has a Ph.D. in law, science and technology and is the CEO of the Australian Institute for Digital Transformation. In his academic research, he presented a concept of a new generation of property registries that are based on a blockchain. He presented an idea of title tokens and supported it with technical protocols for smart laws and digital authorities to enable full-featured legal governance of digitized property rights. He has also developed a cross-chain protocol that enables the use of multiple ledgers for a blockchain estate registry, which he presented to the Australian Senate in 2021.

Buy the dip, or wait for max pain? Analysts debate whether Bitcoin price has bottomed

BTC is flashing a few early bottoming signals, but analysts question whether “buying the dip” is a wise maneuver given the strength of the dollar and other factors.

It has been a rough week for the cryptocurrency market, primarily because of the Terra ecosystem collapse and its knock-on effect on Bitcoin (BTC), Ethereum (ETH) and altcoin prices, plus the panic selling that took place after stablecoins lost their peg to the U.S. dollar.

The bearish headwinds for the crypto market have been building since late 2021 as the U.S. dollar gained strength and the United States Federal Reserve hinted that it would raise interest rates throughout the year.

According to a recent report from Delphi Digital, the 14-month RSI for the DXY has now “crossed above 70 for the first time since its late 2014 to 2016 run up.”

DXY index performance. Source: Delphi Digital

This is notable because 11 out of the 14 instances where this previously occurred “led to a stronger dollar ~78% of the time over the following 12 months,” which points to the possibility that the pain for assets could get worse.

On average, the DXY gained roughly 5.7% after its RSI rose above 70, which from May 13’s reading “would put the DXY Index just shy of 111, its highest level since 2002.”

BTC/USD vs. DXY Index (inverted) and a rolling 60-day correlation. Source: Delphi Digital

Delphi Digital said,

“Assuming the correlation between the DXY and BTC remains relatively strong, this would not be welcoming news for the crypto market.”

Bitcoin is at a key area for price bottoms

Taking a bigger picture approach, BTC is now retesting its 200-week exponential moving average (EMA) near $26,990, which has “historically served as a key area for price bottoms” according to Delphi Digital.

BTC/USD vs. 200-week EMA vs. 14-week RSI. Source: Delphi Digital

Bitcoin is also continuing to hold above its long-term weekly support range of $28,000 to $30,000, which has proven to be a strong area of support throughout the recent market turmoil.

While many traders have been panic selling in recent days, Pantera Capital CEO Dan Morehead has taken a contrarian approach, noting, “It’s best to buy when [the] price is well below trend. Now is one of those times.”

Bitcoin fund inflows relative to price trend. Source: Twitter

Morehead said,

“Bitcoin has been this “cheap” or cheaper relative to trend only 5% of time since Dec 2010. If you have the emotional and financial resources, go the other way.”

A word of caution was offered by Delphi Digital, however, which noted that “the best opportunities or “deals” in the market are not around for long.”

Since BTC has been trading in the $28,000 to $30,000 range for an extended period of time, “the longer we see price build in these areas, further continuation becomes more likely.”

If further decline occurs, the “weekly structure and volume structure support at $22,000 to $24,000” and the “2017 all-time high retests of $19,000 to $24,000” are the next major areas of support.

Delphi Digital said,

“Early signs of capitulation are starting to bleed through, but we can’t say we’re nearing the point of max pain just yet.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin rejects $40K as US dollar strength hits 20-year high

The U.S. dollar currency index breaks through resistance to hit its highest level since 2002 — to the detriment of practically everything.

Bitcoin (BTC) made a fresh bid to crack $40,000 on April 28 as Wall Street trading opened to twenty-year highs for U.S. dollar strength.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

DXY now in “parabolic rally”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting a high of $39,883 on Bitstamp before momentum waned, sending the pair $800 lower hours later.

Traders had predicted what they saw as a relief bounce, with the implication that the subsequent rejection would spark continuation of the downtrend.

On the day, caution was advised.

“BTC currently consolidating in this falling wedge. In case of a breakout, I’d be targetting $42 thousand. It’s good to wait for confirmation first if you decide to take the trade, IMO,” popular Twitter account Daan Crypto Trades argued.

“Only a strong break and reclaim of $40.6 thousand would make me look at higher targets,” fellow trader Crypto Ed added.

“Charts: mostly pointing lower. Liquidity: a squeeze to the upside to hunt the shorts.” 

However, with limited movement on Bitcoin, itself, attention was fully focused on the dollar, which continued to outdo itself as the U.S. dollar currency index (DXY) hit its highest levels since 2002.

U.S. dollar currency index (DXY) 1-month candle chart. Source: TradingView

“The parabolic rally by DXY does not bode well for risk-on assets like stocks and Bitcoin. Until the rally cools off, playing defense is the way to go,” commentator Benjamin Cowen warned.

Others agreed that DXY was now “parabolic,” while trading guru Blockchain Backer saw similarities between the dollar’s current setup versus other currencies and the period immediately after the March 2020 COVID-19 cross-asset crash.

A reversal of trajectory for USD should give Bitcoin some relief, the theory goes, with Cointelegraph contributor Michaël van de Poppe forecasting it to do “really well” in such circumstances.

Analyst: USD will crumble in upcoming “major currency crisis”

The rampant USD was, meanwhile, sparking concerns about knock-on effects for other economies.

Related: Ex-BitMEX CEO explains how Bitcoin will have hit $1 million by 2030

Should instability enter the picture, volatility may return to haunt risk assets already at the mercy of central bank anti-inflation policy. Ironically, the spark might be Japan, where the central bank continues to print money.

“Whichever way Yen goes from here, chaos follows,” Brent Johnson, CEO of Santiago Capital predicted on April 27. 

“If capital flows back into Japan & it retraces to the support line, it’s a rug pull on funds allocated to rest of the globe. If continues to dive it pressures the PBOC to let the Yuan also fall. Neither of these options is good…”

The Japanese yen also traded at twenty-year lows on the day.

“What do Keynesian investors do in a crisis? They rush into the $ thinking it is safety,” Alasdair Macleod, head of research for precious metals trading firm Goldmoney, added.

“Nearly all investors and money managers have been brainwashed into thinking this way since the Nixon shock. This morning JPY slide accelerates.” 

Macleod saw what he called a “major currency crisis” coming, engulfing the dollar’s strength “next” as it followed the fate of the yen, euro and pound sterling.

JPY/USD 1-month candle chart. Source: TradingView

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Trader flags BTC price levels to watch as Bitcoin still risks $30K ‘ultimate bottom’

A lot rests on the U.S. dollar cooling its bull run and fast, Michaël van de Poppe says, with Bitcoin’s upside potential still impressive.

Bitcoin (BTC) remains a slave of the U.S. dollar on April 27 as the greenback spells fresh misery for risk assets across the board.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

BTC faces off with the support zone to hold

Data from Cointelegraph Markets Pro and TradingView showed a precarious picture of BTC markets on April 27 as bulls battled for control of short-term support levels.

After dipping to $37,700 on April 26, Bitcoin saw a relief bounce that culminated in a rebound to $39,200 — a zone th is now critical to flip back to support, one trader says.

In his latest YouTube update, Cointelegraph contributor Michaël van de Poppe highlighted the area around $39,300 as a springboard for BTC/USD to attack short-timeframe resistance. Flip it, he said, and the pair could then target $42,600.

“If we lose this one, I think we are looking for short opportunities,” he explained, with possible confirmations of a bottom coming below $37,000.

“If we lose this level as support, I think it could be nosediving as we’re going to trigger liquidity below the lows and then we might be testing some lower levels in which ultimately, if the markets are really ready to nuke, I’m looking at $30,000 as the ultimate bottom for the markets.”

Van de Poppe is far from alone in calling for a $10,000 step down. In recent weeks, several figures have given $30,000 as a target, among them former BitMEX CEO Arthur Hayes and Bloomberg Intelligence chief commodities strategist Mike McGlone.

In his latest blog post, meanwhile, Hayes expanded on his short- to the mid-term view of asset prices, forecasting a dramatic renaissance in both Bitcoin and gold, which he says will hit $1 million and up to $20,000, respectively, by 2030.

XAU/USD traded at $1,887 at the time of writing, having almost hit $2,000 on April 18.

XAU/USD 1-day candle chart. Source: TradingView

Dollar checks rise as crucial resistance nears

As throughout this week, everything hinges on the U.S. dollar currency index (DXY).

Related: Purpose Bitcoin ETF adds 1.1K BTC as data hints investors want to ‘buy the dip’

Reaching 103.28 on April 27, DXY is attempting to match and break above its highs from March 2020, something that would mean multi-decade highs should it succeed.

Van de Poppe flagged 103.77 as the level to watch, while a break in the upside would reduce pressure on Bitcoin and other risk assets.

“If the DXY is finding itself a top — which is most likely going to be above those highs — and take the liquidity there, I think you’ll want to be long Bitcoin,” he added, predicting a “serious run” for BTC should a DXY retracement come in tandem with BTC/USD reclaiming support.

U.S. dollar currency index (DXY) 1-week candle chart. Source: TradingView

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin bears tighten their grip on BTC now that $40K is the new resistance level

Mounting concerns about the state of the global economy and traders’ risk-off sentiment continue to weigh on Bitcoin price.

Bitcoin (BTC) remains below $40,000 for the third consecutive day and the most likely source of the volatility is the worsening condition of traditional markets. For instance, the S&P 500 is down 5% since April 20 WTI crude price dropped 9.5% in seven days, erasing all of the gains accrued since March 1.

Meanwhile, China has been struggling to contain its worst outbreak of Covid-19 despite strict lockdowns in Shanghai and according to Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs, “it’s no surprise, and it makes all sorts of logical sense that the market should be concerned about the Covid situation because that clearly is impacting economic activity.”

Investors were driven away from risky assets

As the global macroeconomic scenario deteriorated, investors took profits on riskier assets, causing the U.S. Dollar Index (DXY) to reach its highest level in 25 months at 101.8.

The cryptocurrency mining business also faced regulatory uncertainties after the United States House of Representatives member Jared Huffman and 22 other lawmakers requested the Environmental Protection Agency to assess whether crypto mining firms were potentially violating environmental statutes on April 21.

Despite Bitcoin’s 4-day price 10% correction to $38,200 on April 25, most holders choose to stay hands-off, as confirmed by on-chain data from Glassnode. The proportion of the supply dormant for at least 12-months is now at all-time highs at 64%. Thus, it is worth exploring whether the recent price rejection impacted the mood of derivatives traders.

Derivatives markets show bearish Bitcoin traders

To understand whether the market has flipped bearish, traders must look at the Bitcoin futures’ premium (basis). Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.

A trader can gauge the market’s bullishness level by measuring the expense gap between futures and the regular spot market.

Bitcoin 3-month futures basis rate. Source: Laevitas.ch

Futures should trade at a 5% to 12% annualized premium in healthy markets. Yet, as displayed above, Bitcoin’s basis moved below such a threshold on April 6 and is currently at 2%. This means futures markets have been pricing in bearish momentum for the past couple of weeks.

To exclude externalities specific to the futures instrument, traders should also analyze the options markets. For example, the 25% delta skew compares similar call (buy) and put (sell) options.

This metric will turn positive when fear prevails because the protective put options premium is higher than similar risk call options. Meanwhile, the opposite holds when greed emerges, causing the 25% delta skew indicator to shift to the negative area.

Bitcoin 30-day options 25% delta skew. Source: Laevitas.ch

If option investors feared a price crash, the skew indicator would move above 8%. On the other hand, generalized excitement reflects a negative 8% skew. The metric shifted bearish on April 7 and has since kept above the threshold level.

Related: Bitcoin sets up lowest weekly close since early March as 4th red candle looms

Traders will resist eventual price pumps

According to derivatives indicators, it is safe to say that Bitcoin pro traders became more uncomfortable as Bitcoin tested the $39,000 support.

Of course, none of the data can predict whether Bitcoin will continue to downtrend, but considering the current data, traders are overcharging for downside protection. Consequently, any surprise price recovery will be questioned.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Bitcoin climbs above $41K on Wall Street open as gold dives, dollar cements highs

Bitcoin carves out its own trajectory as Wall Street trading gets underway in the first session after Easter.

Bitcoin (BTC) reclaimed $41,000 on April 14 as the first day of Western stock market trading after Easter painted a more bullish picture.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Analysis calls for caution on BTC

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD spiking above $41,000 during April 19, reaching five-day highs on Bitstamp.

In a refreshing change to the gloomy atmosphere over the holiday period, the largest cryptocurrency began to copy what gold had achieved days prior, the latter since declining from $1,998 to $1,960 per ounce at the time of writing.

XAU/USD 1-hour candle chart. Source: TradingView

Equally energized, however, was the U.S. dollar, which continued cementing its strength in an ongoing potential headwind for BTC.

The U.S. dollar currency index (DXY) remained above the crucial 100 mark on the day, with analysts previously predicting that its next move would be a make-or-break moment for crypto.

U.S. dollar currency index (DXY) 1-day candle chart. Source: TradingView

As crypto sentiment exited “extreme fear,” monitoring resource Material Indicators nonetheless called for a level-headed appraisal of BTC price action.

Several moving averages, it said on April 19, needed to be reclaimed before the outlook could fundamentally change.

On April 18, however, the account acknowledged the “bullish” nature of the current chart setup.

Pundit pins hopes on RSI bull trigger

In a now rare bull flag from the stock market, meanwhile, the S&P 500 posted a bottom signal on April 19, which has historically spurred BTC price gains.

Related: Bitcoin hodlers targeting $100K is what’s preventing 40% price drawdown, data suggests

The move involves the stochastic relative strength index (RSI) on the three-week chart. Aurélien Ohayon, CEO of software firm XOR Strategy, concluded that a repeat performance was now due.

Bitcoin’s own RSI chart looked similarly primed for positive performance. On daily timeframes, RSI stood at 44.7, having just climbed above the 14-day moving average in what has been a bullish event throughout 2022.

BTC/USD 1-day candle chart (Bitstamp) with RSI. Source: TradingView

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum price ‘bullish triangle’ puts 4-year highs vs. Bitcoin within reach

ETH/BTC could reach 0.10 this year as the market anticipates Ethereum’s proof-of-stake switch.

Ethereum’s native token Ether (ETH) has dropped about 17% against the U.S. dollar in the last two weeks. But its performance against Bitcoin (BTC) has been less painful with the ETH/BTC pair down 4.5% over the same period.

The pair’s down-move appears as both ETH/USD and BTC/USD drop nearly in lockstep while reacting to the Federal Reserve’s potential to hike rates by 50 basis points and slash its balance sheet by $95 billion per month.

The latest numbers released on April 12 show that consumer prices rose 8.5% in March, the most since 1981.

BTC/USD vs. ETH/USD daily price chart. Source: TradingView

ETH/BTC triangle breakout

Several technicals remain bullish despite ETH/BTC dropping in the last two weeks. Based on a classic continuation pattern, the pair still looks poised to resume its strong bull run in 2022.

Notably, ETH/BTC has corrected from a horizontal resistance level that constitutes an ascending triangle range in conjunction with rising trendline support.

As a rule, ascending triangles send the price in the direction of their previous trends. Therefore, since ETH/BTC was rallying before forming one, there’s a decent chance its bull run could continue toward its Feb. 2018 highs near 0.1 BTC, based on the setup shown in the chart below.

ETH/BTC weekly price chart featuring ascending triangle setup. Source: TradingView

Nonetheless, the interim market setup looks skewed to the downside, with ETH/BTC eyeing a correction towards the triangle’s lower trendline following its pullback from the upper trendline.

The bearish reversal scenario

Ascending triangle breakouts reach their upside targets nearly 73% of all time, a study by Samurai Trading Academy shows.

In a separate report, veteran investor Tom Bulkowski also highlights a 70% success rate for ascending triangles, thus underscoring the strong possibility for Ether to reach 0.10 BTC in 2022.

Related: Bitcoin claws back $40K as 24-hour crypto liquidations near $500M

Nonetheless, this still leaves ETH/BTC with a 30% chance to invalidate its ascending triangle setup.

ETH/BTC weekly price chart. Source: TradingView

As it happens, the pair will break below its triangle’s lower trendline, which also coincides with its 50-week exponential moving average (the red wave in the chart above) near 0.06 BTC, opening the door for a further drop to 0.05 BTC, a support area from May-June 2021.

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